By Asad Cheema
ISLAMABAD: The energy experts suggested that there is a need of the hour to redesign the energy sector immediately and shift to solar and wind power at the household level. It saves the foreign reserves of the country, which are now depleting at an alarming rate.
Dr. Khaqan Najeeb, the Senior Economist, and Public Policy Expert, while talking to a seminar ‘Energy Prices, Budget 2022-23, and IMF: Analysis and Perspective, at Sustainable Development Policy Institute” believes that on the budget side, there is a scope for higher collection of Rs 7,800 billion by the Federal Board of Revenue (FBR) through compliance and tackling tax evasion.
It is also important to minimize the level of levies in the energy sector to minimize the impact on inflation. The energy sector needs a redesign urgently in order to find a way forward regarding a way to stagger and pass the revised tariffs for both electricity and gas.
Moreover, Dr. Najeeb suggested that key economic decisions should not be influenced by short-term political goals, as this might not ensure sustainable growth and development. Pakistan’s public sector is facing a severe human resource crisis. There is not much room for hiring up-and-coming talent at various institutions. Dr. Abid Qaiyum Suleri, SDPI Executive Director, suggested that all political parties and stakeholders should be included in broader consultations on the national economy.
The reason for this is that political
uncertainty is adversely affecting Pakistan’s economic situation.
Shahbaz Rana, a senior journalist, and an economic analyst believes that the
inflation rate (around 13-14%) forecast by the central bank is very low and
is likely to reach at least 17%. There is an imbalance between the SBP
inflation numbers and the ground reality of inflation. There is a
possibility that inflation will exceed 30% in the near future, according to
a study by a Jhon Hopkin University researcher.
In the federal budget for 2022-23, the true picture of our country is not
portrayed, and the harsh realities of our economy are ignored.
Khalid Mustafa, a senior journalist, and energy sector analyst said that the
Pakistani economy is experiencing difficulties in all sectors. The policies
we adopted did not address all of the issues we face. These sectors do not
take into account the fact that there is a shortage of human resources.
Pakistan’s energy, commodity, and financial sectors have become
unsustainable and are now on the verge of bankruptcy. Similarly, Rs 2.5
trillion of circular debt has made the energy sector unsustainable. The
capacity payments in the next fiscal year are expected to reach Rs1.4
trillion, which is approximately Rs 800 billion at present.
Mr. Mustafa says that the CPEC-linked energy projects are dependent on
imported fuel. Therefore, with the increase in fuel prices on the
international market, we are left with only $8.9 billion in reserves, which
can cover only two weeks of imports. “The main reason behind excessive
load-shedding in the country is the shortage of foreign reserves and our
inability to finance the imported fuel.”
He suggested depending more on indigenous fuels for power generation like
Thar coal. “We must preserve energy by closing markets at 6:00 pm rather
than 9:00 pm. It is high time to completely shift towards renewable energy
sources such as wind and solar,” he proposed.
Kaleeq Kiani, a senior journalist, and energy sector analyst said that
Pakistan’s electricity losses are around 18-19%, which are transferred to
consumers but ultimately become part of circular debt. The current circular
debt is around Rs 2.5 trillion. This circular debt will be around Rs. 3.2 to
3.3 trillion at the end of this year. He further said that the increase in
energy and gas prices, petrol levy, and reduced fuel subsidy will put a
burden of Rs 5,000 billion on consumers.
Mr. Kiani expressed his concerns that social protection schemes like BISP
cover 30% of the population living below the poverty line, but the
population just above 30% is the one who will bear the shock and drop below
the poverty line.
The government has announced a solar scheme for households consuming 200
units per month, but it didn’t give any incentive to avail of this scheme.
“People don’t have the capacity to repay the debt, therefore, all these
subsidies need to be reverted.” He proposed the government install the solar
system itself for the consumers and fix a tariff amount which they will pay
against this subsidy.
In his concluding remarks, Dr. Shaukat Hameed Khan, a former member of the
Planning Commission, asserted that our bureaucrats, in their capacity as
public servants, must resist pressure from the political decision-makers, if
their policies do not align with the long-term goals and national interest.
There is a need to enhance job opportunities, especially in the power sector
by imparting relevant training and skills to our workforce, as it is very
imperative to draw foreign investment into the sector.
